The former national executive director of the Zionist Organization of America (ZOA) has sued the organization, its president, and board of directors alleging he was fired after filing a “whistleblower” complaint with the New York State attorney general charging the ZOA with years of
“deceit and fraud.”
The suit — which claims the ZOA lost its tax-exempt status in 2012 because its president, Mort Klein, did not file paperwork with the Internal Revenue Service to hide cash gifts he had received — was filed July 25 in Queens Supreme Court by David Drimer, 62.
Drimer had been hired in August 2011 and was fired last Nov. 14, five days after filing his whistleblower complaint. He is seeking $3.387 million in compensatory damages, $1 million in punitive damages, and the removal of Klein as the organization’s president for alleged breaches of fiduciary duty.
In an email to NJJN, Mark Levenson, chairman of ZOA’s national board and a resident of West Orange, wrote of Drimer, “After he was terminated by the Zionist Organization of America, the ZOA’s former National Executive Director has filed a lawsuit against the organization,” Levenson acknowledged. “On the advice of counsel, we cannot comment on the lawsuit, other than to say that we reject the plaintiff’s allegations as false and will vigorously defend against them.”
He added, “The ZOA’s important work on behalf of Israel and the Jewish people will continue as usual.”
The ZOA’s lawyer, Clifford Rieders, declined comment, saying: “It’s in litigation and will be addressed appropriately. We believe it is frivolous and there is no basis for it.”
The suit acknowledges that when Drimer brought his allegations to the board, it hired an outside law firm, Copilevitz & Canter of Kansas City, to investigate his claims. The suit said the firm “determined there was no whistleblowing as defined by established law.” Nevertheless, it said, all the allegations were investigated and “it was found that there was no conduct on the part of the ZOA or any of its employees, agents, or servants that was illegal, fraudulent, or in violation of any adopted policy of the nonprofit corporation.”
The suit pointed out that Drimer “had never seen nor received any alleged report or any of the findings of Copilevitz & Canter.”
Rieders, ZOA’s lawyer, declined a request to provide a copy of the report to NJJN, explaining it is an “internal” document.
In the suit, which was first reported on in the Forward, it is stated that Klein has served as ZOA’s president since 1994 and that he has claimed he worked without compensation for the first five years. But, it is alleged, Klein received “substantial secret cash ‘gifts’ from some members of the board of directors and other donors” and that the board was informed of it. But an outside firm hired by the board in 2007 to suggest Klein’s compensation was not so informed when it submitted its recommendation, which included money for the years he was not paid.
Drimer claimed also that Klein never reported the off-the-books payments he received to the Internal Revenue Service nor to ZOA’s auditors. And to conceal those payments, the suit alleges the ZOA did not file its required IRS 990 forms for three consecutive years, causing the IRS to revoke the group’s tax-exempt status retroactive to May 2011 — something Klein initially concealed from the board.
The suit claimed also that Klein would instruct the ZOA’s accounting department to credit to his annual board dues the honoraria and contributions he received from donors that were payable to the ZOA. The accounting department would then send acknowledgement letters or receipts for the donations to Klein and not those who actually made the gift.
Drimer alleged also that Klein directed that the $38 million the ZOA received from the sale of its Manhattan property be placed into low-yielding U.S. Treasury bills. After nearly a year, the ZOA’s investment committee directed that the money be placed with a qualified investment manager. But Klein unilaterally decided to keep $5 million in a money market account, prompting the resignation of a longtime board member.
“Defendant Klein acted as if ZOA existed for his own benefit without regard to his responsibilities as a fiduciary of ZOA and its members,” said the suit.
And it said that when Drimer brought these matters to the attention of the ZOA leadership in July 2017, “he suffered intimidation, harassment, discrimination, and other retaliation and adverse employment consequences.”
Stewart Ain is a staff writer for The New York Jewish Week, NJJN’s sister publication. NJJN staff writer Johanna Ginsberg contributed to this report.